Pundit Interviews

Pundit Letters





Perishable Pundit
P.O. Box 810425
Boca Raton FL 33481

Ph: 561-994-1118
Fax: 561-994-1610


email:
info@PerishablePundit.com

a

Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur



Industry Giant Bob Strube Sr.,
Passes Away

The published notice was simple:

ROBERT WILLIAM STRUBE Sr.
Robert William Frederick Strube, Sr., age 91, beloved husband of 69 years to Helen M. Strube; loving father of Robert (Susan) Strube, Jr. and Janet (Timothy) Fleming; dear grandfather of Robert Strube III, Kirsten Lodarek, Timothy Fleming, Jr., Christian Fleming, Jon Strube and Suzanne Trott; great-grandfather to 15; brother of the late Florentine Strube.

And accolades were just starting to come in:

Mr. Strube was one of the most kindest, honest and straightforward individuals that I have ever met in the produce industry. Mr. Strube taught everyone around him who wanted to learn what was the right way to conduct business.

I am a very fortunate person to have known him throughout the previous years, and always had the upmost respect for this man.

Our deepest regrets to the Strube Family at this time.

— Joe Mercurio and Teri Trost, Columbus, Ohio

______________________________________

Bob and the entire Strube family have been very special to our family for many years. Bob was a unique produce man of outstanding integrity. Our prayers are for the family as they go through this difficult time.

— Wayne Brandt, Reedley, California

________________________________________

The industry truly lost a giant today. Bob’s can-do, never-give-up attitude helped build both a family and a company that reflect the very best values of our produce industry.

He let it be known that he lived by several mottos — “Work is a blessing,” and the self-reliant creed “If it is to be, it is up to me.”

— Tom Stenzel
President
United Fresh Produce Association
Washington, DC

______________________________________

Since my first day on the market, I have been working with the Strube family and I can honestly say it was the only work environment where my brother & I have felt like we belonged. Strube quickly became a huge part of my life & I still feel like I am part of something great. Not many people know but Mr. Strube helped me start my business & mentored me in many ways. The 20 years I have been involved have been proud years for me & I hope for many more with the great family I am proud to be part of. If I could accomplish a 20th of the great things Mr. Strube has accomplished, I would be proud. I am very sad to see a great man leave us but I must add that he has raised a great family that I enjoy being around and have no doubt in my mind they will keep adding to what was started many years ago. It has been my pleasure to be around such a great man.

— Walter Schroeder
Chicago, Illinois

_______________________________________

From the moment I entered the produce industry, Bob always had time to teach me with enthusiasm and honesty.

He will be missed greatly. My prayers go out to the entire family.

— Eric Nieman
Associate Publisher
PRODUCE BUSINESS
Highland Park, Illinois

________________________________________

I have many fond memories of a great friend and man who taught me many things and gave me hours of friendship on the market. He always had my respect Please accept my deepest regrets at your time of sorrow.

— Charles Ranzino
Marengo, Illinois

___________________________________________

The food depository he helped found issued a salute to the man and his leadership:

‘Food is real energy’
Food Depository founder Bob Strube leaves a legacy of service

For years, Bob Strube searched for a way to take unused produce from the South Water Market and distribute it efficiently to hungry people.

“The poor would go and follow the garbage wagon [at the market] and pick food out,” Mr. Strube said.

Mr. Strube eventually found an outlet for food that otherwise may have gone to waste. In 1979, he came together with five other individuals to start the Greater Chicago Food Depository. Mr. Strube died at the age of 91 on Jan. 14.

In 1979, Mr. Strube donated warehouse space for the fledgling Food Depository at the historic South Water Market on the Near West Side. Mr. Strube, then president of Strube Celery & Vegetable Company, had been active in hunger-relief causes for many years.

“Food is real energy,” Mr. Strube said in 1979. “You need the right kinds of food in the right quantities just to have the energy to get up and go to work.”

The forerunner to the Food Depository was a food cooperative called Feed the Hungry, Inc. that distributed excess produce to low-income individuals for a nominal fee. The co-op, founded in 1970, included more than 20 pickup locations at churches and community centers. Mr. Strube had sketched out ideas for a distribution system as early as 1968.

“You might have your house all paid for, but you still have your taxes,” Mr. Strube said in 1979. “And you’ve got your heat and your electricity and your water bill. You have all these bills to pay and they’re all higher and they have to be paid. The only thing you can cut back on is food.”

The six Food Depository founders — Ann Connors, Father Philip Marquard, Tom O’Connell, Gertrude Snodgrass, Ed Sunshine and Mr. Strube — came together in the basement of a Loop church to discuss the creation of a food bank modeled after St. Mary’s Food Bank in Phoenix. The Food Depository distributed 471,000 pounds in its first year and has distributed more than 750 million pounds of food in its history.

“The only thing that makes any difference at all, while you and I are here in this town, is what you and I do in this town,” Mr. Strube wrote in 1979. “We make the difference while we’re here. The issue is today — what you or I do today that makes a difference in this world. You have to give.”

As for this Pundit, Bob Strube was instrumental in the launch of Pundit sister publication, PRODUCE BUSINESS. He was a founding member of our editorial advisory board and a constant source of education and inspiration. He more than once introduced us to long time shippers of his and urged them to support our then-fledgling enterprise. They typically listened.

Bob wrote over 200 columns for PRODUCE BUSINESS and they were filled with a practical wisdom and generosity of spirit. He had rules that had served his business well — like not paying the family if losses went on too long — talk about a motivational program! He was also markedly prescient. Read this piece, titled “Credit Old Values, Not New Cards,” and you can see him warning of the dangers of excessive credit back in 1995.

Due to ill health, Bob asked to suspend his column back in June of 2002; the title of the piece was “For Everything There Is A Season,” and after quoting Ecclesiastes, Bob laid out his eight basic values:

I am 83 years old. I have lived many seasons and I have experienced all the seasons.

I have been able to experience the seasons of the world, the seasons of the produce industry, the seasons of a family, and the seasons of a business that my father started.

I have been fortunate to watch as four generations of my family worked together to build a business that could adapt and withstand the changes of the seasons. I have been fortunate to watch my industry associates in all segments of the business do the same throughout the country. I have been fortunate that I have been able to meet with my industry associates to discuss and debate the changes of the seasons and to develop resolutions that would address the changes of the seasons. I have been fortunate to be considered a leader in our industry and that my experiences and ability to adjust to the seasons has helped others to adapt their personal lives and businesses to the changes of the seasons.

Now it is time for me to allow someone else to discuss the changes of the seasons with you. This will be my last article for PRODUCE BUSINESS. I do want to leave you with some basic values that I have used to help me adjust to the seasons.

1. You must believe in something. For me it is my God and my family.

2. That fresh fruits and vegetables are the most beneficial food that we can eat.

3. The fresh fruit and vegetable industry is the greatest industry in the world.

4. That we should protect and propagate all the segments of the industry from the seed to the fork.

5. That we need to maintain and support those places where we can meet to discuss and debate the seasons of our industry. For me it was the local and national produce associations.

6. That we can grow enough food to feed the hungry and until we develop the distribution system to achieve that we should not rest.

7. That we should work to promote the family business because it is the core of our economic welfare.

8. For Everything There is a Season. You must rely on other people to celebrate and to survive them.

To my family, friends and industry associates, I wish you peace.

Now, passing at 91, we reciprocate the wish for this industry leader, family patriarch, humanitarian and good friend.

To those who would like to do something in Bob’s memory, the family asks that in lieu of flowers, memorials be directed to the North Shore United Methodist Church or:

The Bob and Helen Strube Freedom from Hunger Fund
c/o Greater Chicago Food Depository
4100 W. Ann Lurie Place
Chicago, Illinois 60632

As for us here at the Pundit and PRODUCE BUSINESS, our gift will be different. Much of Bob’s work was done in a pre-digital age. We are going to re-keystroke all his writing for us and make his oeuvre available on our website for the benefit of this industry and our posterity.

Deepest condolences to the family and associates at Strube Celery & Vegetable Company.




Wal-Mart’s Blind And Costly Focus On FOB’s

Our piece, Flaws In Wal-Mart’s Produce-Procurement Thinking, brought a number of interesting responses. For example, a prominent retail produce executive made this comment:

As per normal, great article and insight on Wal-Mart Procurement.

We experienced this same confused logic prior to our split with the Mother ship. When folks with little industry experience are making the grand plan decisions, the lower level folks generally make the numbers be whatever they need to be.

With all the moving parts that exist within produce logistics, saving the 10% based on some esoteric metric is like playing the game of shells. It’s probably still there somewhere but you just need to find it. It could be hiding in brokerage fees, freight cost, cooling and palletization fees, sizing, quality or any number of below-the-line costs.

Now the more interesting thing is that, in general, apple prices are down significantly from last year. We experienced a high market for the 2008 crop, and the 2009 crop gave us plenty of volume on the sizes we want… so the market actually fell when compared to last year. Not by 10%… but by an average of almost 19%. So… if I as a buyer have been given the charge to save 10% on apple costs, and the market drops 19%, can I deliver the targeted 10% savings and make my performance goals??

Oh Yeah, you betcha!

— Dan Sutton
Director of Produce
Albertsons LLC
Boise, Idaho

We appreciate Dan’s willingness to point out the enormous problem with these types of pronouncements. When The Financial Timesreported that Wal-Mart was claiming that its Washington apple procurement experiment, which we talked about here, was saving it 10%, it is hard to give very much credence to that.

First, as Dan Sutton points out, if you focus on getting low FOBs, you can get low FOBs — that doesn’t mean lower total cost. We’ve sat in offices and watched sellers say: This guy is focused on getting the FOB down, so let’s up the transportation and cut the FOB.

We are reminded of the slogan emblazoned behind the desk of Meshulam Riklis, the businessman more famous for manipulating financial structures (and for marrying and promoting the career of Pia Zadora) than for actual business. The motto he lived by: “You can name the price if I can name the terms.”

Second, Wal-Mart could compare its costs against its last year’s contract, but it can’t know what it would have paid on a fictitious contract that never was actually negotiated. So, as Dan points out, if the apple market is weak, maybe it could have saved more under its old program.

Third, the impact on consumers can be significant and deleterious to Wal-Mart. The Pundit used to ship a lot of Fancy Goldens to Europe. Did it for years with satisfied customers. Then one year, all the customers in Europe started complaining: These were not Fancy apples.

We did an investigation and it turned out that that particular year happened to be a bad one for quality. In prior years, the typical fruit shipped as Fancy well exceeded the minimum requirements. The market had become conditioned to thinking Fancy meant product that well exceeded minimum requirements for the grade.

When Wal-Mart was under contract, its vendors had an obligation to meet volume requirements week in and week out at the agreed price. Sometimes, although the contract may have been based on a particular grade, say US Extra Fancy, the shippers wound up delivering better grades, say Washington Extra Fancy, to meet their obligations.

Now the shippers can pick and choose when to bid for the Wal-Mart business; that won’t happen very much.

So the consequence of Wal-Mart’s switch is that its shoppers will have lower quality produce than they did before. What is the long-term cost to Wal-Mart of handling a lower quality package — even if it meets minimum Wal-Mart specs.

Fourth, Wal-Mart didn’t just buy apples and transport… it bought a range of services that fall under a category of business analysis. Just a tiny shift here can result in thousands of incidents of being out of stock. Under the old system, if Wal-Mart was out of stock, that counted against the vendor and would affect its being awarded future business.

Who does it count against now? Nobody. Which means out-of-stocks will zoom. This means that even if they are successful in reducing procurement costs — the whole procedure will still cost Wal-Mart a fortune.

This is what happens when people who don’t know the business seize on something they can quantify — cost of goods sold — and work to reduce it without really understanding the consequences of their actions.




Gary Fleming Speaks Out:Produce Traceability Series Part 1: ‘Absent Of PTI’

We have, of course, focused extensively on traceability issues, and an important part of that coverage came from Gary Fleming when he was working as Vice President of Industry Technology and Standards at the Produce Marketing Association.

Here are some of the pieces Gary has contributed in the past:

Guest Pundit — Traceability And The Need For A Common Language

Guest Pundit — Pairing The Global Language With Technology

Guest Pundit: Traceability — A Forgotten Piece Of Food Safety

Pundit’s Mailbag — Traceability

Pundit’s Mailbag — Joint Response To Produce Traceability Cost Concerns

Late last year, PMA announced that Gary would be leaving PMA. This is how PMA’s President and CEO shared the news with the PMA board as soon as Gary tendered his resignation:

From Bryan Silbermann, PMA President & CEO

Gary Fleming, our much-valued Vice President of Industry Technology & Standards, will be resigning from his staff position effective November 3. Gary has been an integral part of the PMA management team for the past six years and has done so much to assist us in enhancing members’ use of data standards and efficiency tools. His most recent work of course has been to provide the essential staff expertise for the Produce Traceability Initiative. Gary will be speaking at PMA’s Fresh Connections in Charlotte, NC on November 3.

I asked Gary for permission to share with you his own words explaining the reason for his departure, which is related to balancing demands of work and family. Earlier this year he married Charla, who, to quote him, “has brought a new and exciting dimension to my life. While I am still focused on my career, I am seeking an opportunity to travel minimally and to perhaps start something where Charla and I can work together. My plan is to create my own business focused on supply chain efficiencies, project management, facilitation and general consulting, alongside my wife.”

You may recall that in my State of the Industry address in Anaheim, I mentioned how Gary has been on the road almost nonstop this past year. As most of you know, Gary has been based out of a home office in Denver.

Since Gary just tendered his resignation today, we have not had time to explore the various ways in which PMA might continue to have access to his expertise. Gary is leaving the PMA staff team on very good terms and has offered to remain engaged with PMA on a consulting basis. As we have much respect for one another and understand the rationale for his decision, please know that we will explore all reasonable options.

Many in the industry, though certainly understanding Gary’s personal motivations, did find the timing of his resignation surprising in light the Sisyphean task ahead to ensure the implementation of the Produce Traceability Initiative.

Gary, along with his wife, has launched a new consultancy, the Symbolon Group, which, as Bryan mentioned, is focused on helping companies/industries with supply chain efficiencies, traceability, facilitation roles and general consulting.

We reached out to Gary to see if he might be willing in his private capacity to contribute to the industry by speaking bluntly on the issue of traceability in general and the Produce Traceability Initiative in particular. He has been generous enough to contribute three separate pieces, which will run serially here at the Pundit. All are on the topic of the Produce Traceability Initiative (PTI).

Below you will see the first part of this three-part series, titled “Absent the PTI”. The second part of the series will discuss an assessment of both the IFT report, funded by the FDA, as well as the public hearing held December 9th and 10th in Washington, D.C. The third part of the series will look at the best practices created as part of the PTI and why they are necessary for effective implementation.

Before we run Gary’s piece, though, we thought it would good to get a little more insight into his purpose in leaving PMA and in his general thoughts on PTI. We asked Pundit Investigator and Special Projects Editor Mira Slott to raise some questions:

Gary Fleming
Symbolon Group
Indian Hills, Colorado

Q: Why did you leave PMA, and what is your new mission?

A: I left PMA on November 3rd in order to pursue running my own company along with my wife. Having my own company allows me to pursue the things for which I have passion and to exercise my own innovation to solutions.

Q: Tell us about your new company… could you describe the services you provide, the scope of clients, who could benefit from your services, etc.

A: My new company is called Symbolon Group (www.symbolongroup.com). We provide services such as group facilitation, project management, consultative services and boot camps for traceability, recall readiness, supply chain efficiencies, best practice development and activity-based modeling for ROI studies. We also provide a free monthly newsletter that updates the industry on issues related to traceability that is concise, to-the-point, and in a manner by which people can understand.

Q: How instrumental were you in development of PTI? Were you the original architect of the concept? How did the strategy unfold?

A: While at PMA, I was the lead architect of the PTI and the lead staff for the initiative between the sponsoring three trade associations. Having been formerly employed by GS1, I have a keen understanding of their standards and their approaches. I was then able to come up with a basic plan based upon our industry’s needs and practices, as well as the implementation of these standards in other industries.

As a group, and with the strong leadership of Cathy Green of Food Lion and backing of the three sponsoring trade association boards, we then refined the plan, along with 48 companies representing the produce supply chain, to what is now the milestones and timelines that make up the PTI Action Plan.

Q: How committed are you to the implementation of PTI and why? Do you see any other viable alternatives/traceability solutions? How critical and urgent is it for the industry to move forward with PTI at this time?

A: I am fully committed to the implementation of the PTI as I believe in it 100%. Traceability will not go away. It is needed right here, right now. Companies have to realize that having an internal traceability system of their own is not enough. They need to enable the FDA (the only company responsible for doing a traceback investigation from beginning to end) to link these different systems together.

One of the many great characteristics of the PTI is that it does not require you to have one system. You can still keep your own system, as long as it is augmented with a case identifier (GTIN) and a lot/batch number, which most systems should already have. It is not reliant upon one vendor’s solution. Almost every vendor system out there can use the GS1 standards needed for the PTI.

Q: What are the greatest challenges to achieving true traceability, and how will PTI be able to overcome those challenges?

A: I would define “true traceability” as the ability to trace and track a case of product from harvest to store. I specifically indicated “case” and not “item”, as every handler of the product from harvest to store uses the case, not the item inside the case. The only ones that see the item inside the case are the ones that packed it and the ones that open the case at store level.

The FDA needs to track every handler, not just the ones that pack the case and open the case. As far as challenges of the PTI, I believe the challenge is attaining 100% use. The PTI is a voluntary program that enables whole chain traceability. If companies do not do this on their own, we will have gaps in the traceability link. I believe most companies are awaiting word from their key customers and/or government before they do anything. The industry needs both to push this toward 100% compliance.

With that as an introduction, we will let Gary speak for himself:

Absent the PTI

So what would the traceability scene look like without the PTI? Let’s take a candid and practical look as if the PTI never existed.

There are plenty of software/hardware vendors that have traceability solutions. As much as the hardware/software vendor community would like to think that every company will buy their product, it is impractical and unrealistic to think so. Too much money has already been spent by individual companies on systems that can handle their internal traceability needs just fine. If you agree with this point, read on.

As such, imagine each company with a different traceability system. Each system could have different informational requirements, different system requirements, different hardware requirements, and different software requirements, making it hard to connect one company’s system to another. Although these systems might take care of a company’s internal traceability needs just fine, they do not incorporate information needed by subsequent or previous handlers. The only way to alleviate this problem would be to have all previous and subsequent handlers use the same vendor’s system. Again, impractical and unrealistic.

Now, put yourself in the shoes of the FDA. The FDA is the only organization in the produce industry that needs to be able to create the whole traceability path, from harvest through packing through distribution through transportation and arrival at the store. Now imagine yourself having to contact each of these handlers about the implicated product. One company might not have electronic records, requiring manual effort to retrieve the needed information, elongating their traceback investigation. One company might not have the information needed, creating a break in the traceability link, complicating the investigation further.

This is not too far from the state in our industry, as was seen in the Health and Human Services report done in March of 2009. Each company might have a different number for the item (e.g., supplier number, distributor number, retailer SKU, different descriptions, etc.), further elongating their traceback investigation and disabling the advantage of having electronic records. Another company might need specific information germane to their system — information that subsequent handlers nor the FDA has, further elongating their traceback investigation.

Each company might have different formats by which to deliver this information to the FDA, causing the FDA to cross reference and massage the data, further elongating their traceback investigation. This continues on and on, further delaying the FDA’s ability to conduct their investigation. The longer it takes the FDA to do their full investigation, the longer the product remains out of commerce and off of shelves, which continues to erode consumer confidence in the commodity and the category overall.

Another practical reality: in the world of food recalls, you are guilty by association until proven innocent, especially in commodity-based industries such as produce. If you are not part of a process that can clear you and all subsequent handlers of your product, your product will remain in question until the FDA concludes their investigation. Just because you can prove that your product was clear while inside your own four walls does not mean that the subsequent handlers of your product are also clear. As such, your product will continue to be implicated until the FDA concludes their investigation. This is yet another reason as to why we need to help the FDA perform their investigation as quickly as possible.

Now that we have taken a practical look at what things would look like without the PTI (Produce Traceability Initiative), let’s now take a look a practical look at the future of traceability by asking some basic questions. Let’s begin by making a few assumptions:

Assumption #1: The FDA wants electronic records and a 24- to 48-hour response time on inquiries. It has not been a secret that, at minimum, the FDA has wanted these two important elements. It has been stated publically in many different forums. They have not voiced opinions on “how” to accomplish either of these, but have been vocal about their desire to have these.

Assumption #2: Congress has been considering legislation that has components of electronic records. Most of the proposed legislation before Congress already contains this language. Congress is strongly considering the FDA position on these points (see Assumption #1), as the FDA will be the regulators of what is passed.

Assumption #3: Traceability will be needed, at minimum, to exist at the case level. The case is handled by everyone in the supply chain (grocery retail and foodservice), whether you are a grower, shipper, packer, processor, distributor, wholesaler, retailer, operator or transporter. As each of these handlers creates a possible point of infestation, records are needed at each handling point. This is not the situation for the item level. The only parties that handle the item are the ones who pack the item into a case, and the ones that open the case. The balance of subsequent handlers of the product will never see the item that is inside the case (e.g., shipper, distributor, wholesaler, transporter, etc.), as they do not open the case. Each of these handling/storage points could be the possible point of infestation and need to be included in the traceability path.

Based upon these assumptions, the likelihood of legislation being passed with these components at minimum is fairly high. If legislation with these components is passed, ask yourself the following questions:

1. How will we get the information needed for traceability off of the case and into our systems (i.e., databases)?

PRACTICAL ANSWER: It can be done manually or in an automated fashion.

a. Manually would require an individual to read and key into your systems information needed for each case that comes into and out of your facility. This could bring your entire receiving, shipping and administrative operations to a crawl. Think of any buyer receiving more than 50,000 cases into one distribution center per week. Now multiply that by the number of distribution centers.

b. Electronically capturing information off of each case would mean the use of automated tools such as barcode scanners or RFID readers. Barcodes have been around for over 35 years and are used in most every distribution center around the world. RFID, although a strong possible solution, still has some challenges in the way of costs, water and metal. The only key buyer using RFID in the food industry even agreed that barcodes was a better means by which to capture data off of cases at this time.

PRACTICAL CONCLUSION: Barcodes

2. What type of barcode should be used?

PRACTICAL ANSWER: the one that is most widely used around the world. The barcode standard that is most widely used around the world is the GS1-128 barcode. It is used in over 145 countries, over 25 different industries, by more than two million companies. It is not practical to reinvent the wheel, especially when the wheel accommodates what is needed and is already being used by most companies. In addition, in order for everyone to be able to read this barcode, there would have to be one standard barcode being used to ensure companies have the right scanners to read the barcode.

3. What information should be put into the barcodes?

PRACTICAL ANSWER: minimal information needed for traceability. The minimal and necessary pieces of information cover (1) what the product is and (2) where it came from.

a. “What is the product?” If we are to have electronic records of this information and if we are to capture it electronically, we cannot rely on a product description. As any IT person will tell you, a free-format description cannot be used effectively for locating records in a database. Primary reason is that each company might have a slight deviation when describing the product (i.e., a different spelling, different abbreviation, different attribute, etc.), each of which would be treated as separate items in a database. A standard number that has a defined length and type is needed not only for storing and retrieving information from a database, but also putting this information into a barcode.

b. “Where did it come from?” Every fresh food sector relies on a batch or lot number to get back to where the product was either harvested, processed or packed. As such, the Lot/Batch Number is not new to the industry and is a key element of traceback.

c. Any additional information would most likely require a subsequent barcode and/or a different type of barcode that can hold more information. Both of which would create more costs and/or slow things down. In addition, if industry members do not know precisely what will be encoded in the barcode, how will they know how to build their storage databases to store the information captured off of the barcode?

4. What standard numbering protocol should be used to identify the product?

PRACTICAL ANSWER: the one most widely used around the world. The GS1 standards, as mentioned above, are the most largely implemented standard in the world, giving each company that exports or imports product the possibility that the same standard is or can be used for commerce. The standard number protocol used by GS1 for identifying cases is called the GTIN (Global Trade Item Number). It is equivalent to their numbering standard used on the item (the ubiquitous U.P.C.), and uses the exact same Company Prefix.

The same practical look as above was taken when considering things such as the format of the information, the required pieces, the optional pieces, what to store, how long to store, what label to use, etc.

The PTI went through the same scenarios and questions and came up with the same practical answers. These answers were incorporated into an action plan with specific milestones shown on the PTI website (www.producetraceability.org). No single person has a magic, crystal ball to see what will happen in the future. Nor will every company agree with the conclusions made or the practical answers given above. However, when taking the emotion out of the equation, it would be difficult to justify something different.

We can change the outlook on the future of traceability by asking different questions, but then we wouldn’t be addressing the climate and the need we have for traceability right here, right now. The Produce Traceability Initiative does not suggest companies will have no costs, but it does suggest a process that can work while considering the needs of the FDA and the investments already made by a large number of companies around the world.

Gary has an incisive mind and it enables us to cut through a great deal of the mist — and myths — surrounding produce industry traceability.

Although Gary makes a persuasive case, the question we need to answer may be whether ANY voluntary program can provide industry-wide traceability that will both satisfy the FDA and ensure the industry doesn’t get a black eye from actors that do not take supply chain responsibilities seriously.

As long as it is not legally required, non-compliant product will be available and often less expensive — thus tempting even large buyers to purchase it so they can compete effectively. Smaller buyers, not members of PMA, United or CPMA, will continue with business as usual, creating a competitive environment difficult for the big buyers to afford the expense of PTI.

So the technical logic that Gary defines so well may not translate into economic logic if such traceability is not required by law. Of course, if one believes it will eventually be required, preparing now would be a prudent step.

Certainly if one wants to proceed, one could do a lot worse than to work with Gary. We wish him every success in his new endeavor.




Haiti Earthquake Relief Underway
But Much More Needed

There was a time when the Pundit Poppa was the largest importer of Haitian mangos in the United States, so it is with a special connection that we read the horrible news of the aftermath of the earthquake in Haiti. You can watch what difference an earthquake can make right here.

A continuing series on the crisis gives this report:

They are still having tremors… From reader DeLynn’s missionary friend’s facebook:

3:24 PM It’s a nightmare here. They are starting to dig mass graves for the many unclaimed bodies. Some areas, the smell is unbearable. We still are having tremors. Just now in fact.

I feel that these little snippets I’m writing don’t begin to convey the suffering here. Everybody is living in the street, including us… BIG tremor just sped up my heartbeat… We are getting a radio station from PAP and they are instructing folks on how to deal with all the dead bodies.

One of the things that really tears me up, and I may not even be able to write this… the kids we saw on our way out to the school. They still came running out to us and calling our names with great joy as they always do. But, many of them had piles of rubble behind them. Rubble that 2 days ago was where they called ho… me.

How can they even think about smiling at a time like this?

6:48 PM The tremors continue. Thank you again for so much concern and so many prayers. This is truly overwhelming and we want to be helping others through this time even as we struggle to find our own way. The Lord is our Hope. Our strength. Our strong tower.

I think that will do it for this post. — 8:26 PM

Fortunately America is responding, and the USS Carl Vinson is on the way.

If you would like to help, here is a broad list of resources.

If you want to get more produce-specific, Pundit Investigator and Special Projects Editor Mira Slott uncovered an organization called ORE:

Organization for the Rehabilitation of the Environment

ORE was established in 1985 by Sean Finnigan, an amateur horticulturist living in Camp Perrin, in the south of Haiti. He saw the potential economic and environmental benefits of grafted fruit trees for Haitian farmers and set out to introduce high value fruit trees as a permanent feature of the Haitian agricultural system.

The organization was started off with a grant by the Canadian Embassy to produce 16,000 grafted fruit trees. At the time this was the first large scale grafting of fruit trees to be attempted in Haiti. The project was a success and was quickly followed by a larger program funded by USAID to produce over 100,000 trees. Sean’s former wife Mousson, an MD with extensive experience working with the local rural communities, joined ORE in 1986, and a few years later took over the administrative direction of the organization, a position she still holds today.

Eliassaint Magloire, an agronomist trained at the University of Florida, and CIMMYT in Mexico, had specialized in plant breeding. He joined ORE as an executive director in 1987 and built up the existing improved seed program as well as other important crop improvement and soil conservation activities.

In 1988 ORE became involved in an extensive USAID funded Watershed Management Project, which was designed to protect the watershed of the Macaya Rainforest and National Park neighboring ORE headquarters in Camp Perrin. ORE primary goal was to introduce lucrative, environmentally friendly activities for hillside farmers in the buffer zone surrounding the national park. Fruit trees, leguminous hedgerows and other soil conservation measures were promoted.

ORE’s first activities with improved seeds where launched at this time, involving a very successful program in which improved seeds where made available on credit to farmers as an incentive for soil conservation work on their land.

Experience from these interventions led to the successful high value fruit tree, staple crop and plant material improvement programs used today. Over the years, successive projects were funded by USAID, the European Union, IDB and the Canadian and Japanese embassies. And although the funding was diverse, ORE maintained a focused approach and only participated in programs that would further out program goals. As a result, we were able to develop a long-term area of expertise in high value tree crops and improved seeds, building an important long-standing network partnership with thousands of farmers in the southern half of the country.

ORE is running a program where you can donate now.

You can also learn more about the Haitian mango industry here and here.

We remember during a visit to the Dominican Republic, which shares the island of Hispaniola with Haiti, traveling through the Dominican Republic countryside and seeing Haitians harvesting sugar cane. As poor as the Dominicans were, the Haitians were much, much poorer.

Obviously at this moment of crisis, governments and individuals must act to try and reduce the enormous amount of human suffering.

It is, however, important that people also realize that this “natural disaster” was made infinitely worse by the dysfunction of Haiti as a country. In fact to call it a “natural disaster” is somewhat deceptive. As David Brooks of The New York Times reminds us:

On Oct. 17, 1989, a major earthquake with a magnitude of 7.0 struck the Bay Area in Northern California. Sixty-three people were killed. This week, a major earthquake, also measuring a magnitude of 7.0, struck near Port-au-Prince, Haiti. The Red Cross estimates that between 45,000 and 50,000 people have died.

The cause of wealth is complex but what is clear is that merely offering low wages is not sufficient to encourage development. Those low wages have to be in the context of a safe society, with clear laws, corruption must be minimized.

It is easy to go back a hundred or two hundred years and blame France, the former colonial master in Haiti, for its problems. But when the clean up is done, Haiti needs not more aid but a political culture capable of making owners of capital feel secure about investing in Haiti. Without that confidence, Haiti is doomed to a grinding poverty that makes natural disasters into catastrophic events.




Boar’s Head Battle With Dietz & Watson Covered On Public Radio

A little while back, we wrote about a controversy stirring in the deli industry with a piece we titled, Dietz & Watson Takes On Boar’s Head: Is Exclusivity Anti-Consumer? Is It Even Good For Retailers.

After Harris-Teeter bumped Dietz & Watson to carry the Boar’s Head line, the Philadelphia-based Dietz & Watson began a campaign to elicit consumer support against Boar’s Head’s policies regarding exclusivity.

Mary Shelman, the director of the Agribusiness Program at the Harvard Business School, then weighed in with a letter pointing out that the Boar’s Head approach could affect retailers in interesting ways. We ran that piece under the title, Pundit’s Mailbag — Deli Private Labels Also Benefit From Boar’s Head Banner.

Then Frank Pocino, Chief Executive Officer for Pocino Foods Co., weighed in and we suggested that companies without a full line had a special stake in this battle. We called that piece, Pundit’s Mailbag — Other Deli Suppliers Look Closely At Boar’s Head Debate

Finally we ran a short piece, Shopping Experience Reveals Weakness In Branded Deli And Food Safety Protocols, that detailed a personal shopping interaction with Boar’s Head Deli at Publix. (By the way executives at Publix quickly called to identify the store in question so they could bring in some training resources to rectify the problem. So props for Publix.)

Now National Public Radio also has picked up on the story, with its “Marketplace” program asking us to comment. They called their piece, Deli Suppliers Vie for Slice of Market and it was motivated by an aggressive and vulgar phone message left on an answering machine:

TEXT OF STORY:

Steve Chiotakis: In a lot of industries, brand names rule. Cars, clothes, even ketchup. But it’s a tougher job to earn name recognition for, say, sandwich meat. Boars Head has built a billion-dollar business in large part by signing exclusive deli deals to market their meats. That includes signs, posters — the marketing works. Now the marketing war is getting ugly. And reporter Alex Goldmark investigates the big battle of the baloney.

Alex Goldmark:There’s only one way to order cold cuts here on 80th and York in Manhattan:

Customer One: Thinly sliced.

Customer Two: Very thin! It’s the only way.

Customer Three: Mortadella and prosciutto.

Customer Four: It has to be sliced thin!

Deli meats are serious business here at D’Agostino’s Supermarkets in New York. So fourth-generation owner Nick D’Agostino thought carefully when he decided not to go with Boar’s Head.

Nick D’Agostino: We have one prominent brand of deli meats we carry, Dietz and Watson, and we chose that ‘cause it’s a good family company — they’re based out of Philadelphia, and so they’re local to us.

That mom-and-pop angle is exactly what Dietz and Watson has been pushing hard since the summer as part of a freedom of choice campaign to get supermarkets to drop their exclusive Boar’s Head deals. And competition is heating up. One distributor in upstate New York left this message on a Dietz and Watson voicemail:

Aggressive Voicemail: Hey Dietz and Watson: I dare you BLEEPers to come up here with your BLEEPing product. I’m a Boar’s Head guy. You bring your BLEEPing little BLEEPing circus up here, I’ll bury you BLEEPing guys.

Boars Head’s headquarters in Florida declined to comment. And the independent distributor in New York that left the message, according to caller ID, told me they don’t know anything about it and the owner there is “a mellow person who wouldn’t do something like that.” Either way, Dietz and Watson saw a marketing opportunity and jumped.

Here’s the editor of Deli Business Magazine, Jim Prevor:

Jim Prevor: I do think that that kind of bullying plays right into the hands of Dietz and Watson.

Who are trying to paint their competition as a corporate giant more than twice their size, throwing their muscle around and preventing diversity at the deli counter. But Prevor says that might not be enough to get supermarkets to make a change:

Prevor: Now the problem with all this issue is that it’s hard to motivate consumers to really, you know, man the ramparts and fight to the death for the brand of salami they can buy in the deli.

And most customers are happy with Boar’s Head. Well, as long as it’s thinly sliced.

Customer Jeanette Senko: Half a pound of sweet sopressata sliced very thin. And if you go over that’s fine. It’s bad, but I don’t care.

In New York, at the deli counter, I’m Alex Goldmark for Marketplace.

You can listen to the audio here.




Cash Or Credit? Which Is More Expensive?

A piece in The New York Times titled, The Damage of Card Awards, posits that the “Fees that merchants build to cover rewards programs lead to higher prices, which are passed on to poorer customers.” The writer, Ron Lieber, even seems to feel guilty about using his credit card:

For several years, I’ve wondered whether my aggressive pursuit of credit card rewards made me a selfish consumer.

After all, the 1 to 3 percent or more of every transaction that merchants pay to accept the cards is a significant cost, and the small local retailers that make neighborhoods vibrant often pay a higher percentage.

Stores then build those fees into higher prices, so people who aren’t earning any rewards can end up subsidizing those who do. Many of these people have no credit cards because they’re financially troubled.

So the risk is that we perpetuate a sort of reverse Robin Hood problem, as Prof. Steven Semeraro of Thomas Jefferson School of Law in San Diego puts it. It’s possible that the poor pay subsidies to finance the rewards of the affluent.

Andrew Martin’s article in The Times earlier this week noted how quickly the fees that merchants pay to accept certain debit cards had risen, too. That suggests a related question: Wouldn’t we all be better off if those of us who use plastic to earn free travel or cash back laid down our cards en masse?

The specific issue of credit card rewards is trivial. Credit card rewards are a mechanism card issuers use to get people to select a particular card and, even more important, get them to elect to use that particular card as opposed to another card at the point of sale. If incentivizing people with points was illegal or ceased to work, card issuers would have to use an alternative. The reason they don’t use that alternative right now is because the alternative is more expensive than the points.

More broadly the whole issue of complaining about the cost of credit card fees is really an example of how hard it is to change our perspectives in business.

Because the use of cash came first, we tend to view the cost of handling credit as an additional cost. But credit and, more broadly, electronic payment devices such as debit cards and key fobs are clearly destined to be the payment devices of the future. For a consumer, they facilitate easy record-keeping, avoid the risks of carrying cash, etc.

In fact, perhaps those focusing on the cost of accepting credit cards have it backwards; they should actually focus on the cost of handling cash.

Think about it. You need armored cars, security systems, cashiers have to be watched like hawks, on and on.

Maybe businesses should stop accepting cash and the public policy issue is getting bank accounts for poor people so they can participate in the modern financial system.




Pundit’s Mailbag — New York Produce Show And Conference ‘Endorsement’

Back in our salad days, when we were green in judgment, the very first retailer to ask this incipient Pundit to keynote a retail event was Dick Spezzano, who asked us to fly to Los Angeles and speak at Von’s annual produce event, which we happily did.

Now, a quarter century later, Dick sends a note referencing our piece, New Event Planned for 2010: Eastern Produce Council and PRODUCE BUSINESS Announce The New York Produce Show And Conference.

Congratulations on being a pioneer along with the Eastern Produce Council to establish the New York Produce Show and Conference.

I know that between Jim Prevor, Paul Kneeland, John McAleavey and the rest of the staff of PRODUCE BUSINESS and the members of the Eastern Produce Council, it will be a huge success. It is long over due.

— Dick Spezzano
President
Spezzano Consulting Service, Inc.
Monrovia, California

Dick was — and is — active in the Fresh Produce and Floral Council, which is the granddaddy of these regional events. In fact he was Chairman of the FPFC back in 2003 and so saw first hand the complexity that putting together an event like this involves — of course he also saw how much the industry can gain from such an event. So his praise for the idea carries special weight.

The reaction to our announcement has been simply fantastic, and already 40% of the available booth space has been sold.

Soon we will be announcing our CHARTER EXHIBITORS and it is not too late to get on that list. If you are interested in exhibiting or sponsoring at The New York Produce Show and Conference, please, let us know here.

If you would like information on attending, let us know here.

And many thanks to Dick Spezzano for taking a moment to send his kind pat on the back. It is much appreciated.




Pundit’s Mailbag — Fresh & Easy’s
Early Figures Found

The great thing about punditry is that if you do it right, you don’t have to do it alone. In fact, here at the Perishable Pundit we are fortunate to have input from knowledgeable and intelligent people from around the world.

You can get a hint of these interactions by looking at our round ups of Pundit Interviews and of Letters to the Pundit, but we also benefit from behind-the-scenes contact every day with really smart people.

One of the benefits of having such a diverse, far-ranging and knowledgeable readership is that if we make a mistake we typically hear about it in minutes.

So when we received a note from Lisa Reeder at H-E-B/Central Market and incorporated it in a piece we titled Pundit’s Mailbag — Early Sales Numbers For Tesco’s Fresh & Easy Hard To Find, we gave a lot of information but forgot about one piece of data that specifically addressed Lisa’s question. We soon were reminded of our lapse:

We met briefly at the Citi Conference in London at which you spoke.

Tesco did report sales for Fresh & Easy for the period Nov 07 to 23 Feb 2008 but only in its report at the end of the fiscal 2009 year. The sales figures are USD32m or GBP16m. The trading loss in the US for the fiscal 2008 year was GBP62m.

I hope that is useful.

— Charles Allen
Principal and lead, Food Retail Analyst
Consumer Equity Research
London, United Kingdom.

Useful indeed, and ten swipes with a wet noodle to the Pundit for not recalling that release.

Lisa, here is your info and many thanks to Charles and the mass of Pundit readers who never fail to help us provide the best and most comprehensive information and analysis.




Pundit’s Mailbag — Nolan Network And Ocean Spray Status

Our coverage of the controversy between Jim and Theresa Nolan, The Nolan Network and Ocean Spray has been extensive. However, many both in and out of the produce trade want to keep up to date:

I’ve enjoyed reading your work, and I wanted to impose on you for a bit of information. I was an in-house attorney at Kraft Foods for 32 years, going to private legal practice and consulting in 2008 . At Kraft, I worked on a number of legal areas, including the the compliance program and antitrust matters. I’ve also written legal treatises on corporate compliance programs and product distribution law.

Your continuing series regarding the Nolan case, and the article in PRODUCE BUSINESS in 2007 really caught my attention, since they touched on so many legal issues (compliance, whistle blowing, price discrimination, PACA), and every reader in the food business knew that the details you recounted were absolutely realistic. So, I’ve been periodically checking on line for more news about the case (which I felt was sad even before Jim Nolan passed away) since the facts would provide an excellent learning example in both of my books.

Have you heard anything more about the status of the case? I’m about to wrap up the semi-annual supplement to my distribution book, and if there is anything you have heard that you can share with me, I would certainly appreciate it.

Thank you for your courtesy.

Theodore L. Banks
Counsel
Schoeman, Updike, Kaufman & Scharf
Chicago, IL

We’ve covered the news and provided analysis here at the Pundit, but the best summation of the story to date was written by Bill Martin and ran in Pundit sister publication, PRODUCE BUSINESS, the piece is titled “Are Any Lessons Learned From Ocean Spray Trial?

The piece quotes the Nolan’s attorney:

“…the turning point in the trial is the exceptional testimony of Theresa Nolan in explaining the produce industry and then describing all of the players so a jury of lay people could understand it. “Once she had done that and I saw the jury was playing pretty close attention, I thought we had a good chance at prevailing,” he says. “There’s testimony right off the bat that was really important and really well received.”

Read the whole piece here.

Mail to a Friend

© 2017 Perishable Pundit | Subscribe | Print | Search | Archives | Feedback | Info | Sponsorship | About Jim | Request Speaking Engagement | Contact Us